Old-age Income Research Articles

Drivers of mortality: risk factors and inequality

Abstract This paper takes a detailed look at socio-economic variation in mortality across England. Generic metrics such as the index of multiple deprivation (IMD) can be effective at the aggregate level of national deciles, but we demonstrate that they perform much less well at the regional, urban–rural, and neighbourhood level. We use local linear regression to develop a new, customized index for neighbourhood mortality that addresses the mortality-specific shortcomings of the IMD based on socio-economic and related, non-spatial predictive variables. We find that old-age income deprivation and employment deprivation are key determinants of mortality, but also that urban–rural class and the presence of care homes in a neighbourhood have an important role to play in assessing underlying mortality rates relative to national mortality. Residual spatial/regional variation in mortality is found to be much less significant than socio-economic variation and much lower than the residual regional variation that results from the use of the IMD.

Varying effects of public pensions: Pension spending and old-age employment under different pension regimes

Socioeconomic consequences of pension reforms have often been discussed without careful consideration of institutional contexts, despite the fact that institutional designs of public pensions differ substantially across countries. This study argues that the outcomes of pension reforms vary depending on the institutional structure of public pensions, by showing that the associations between public pension spending and old-age employment rates of different socio-demographic groups vary across different institutional contexts. Using time-series cross-section data from 20 European countries and the United States from 1998 to 2019, the study examines how changes in public pension spending ‘per older person’, a comparable measure for the welfare state effort towards old-age income security, are associated with gender- and education-specific employment rates in old age. The study also explores how these associations differ under different pension regimes, constructed based on the degree to which financing and benefit structures exhibit redistributive orientations. The results reveal complex gender and educational gradients in the relationship between public pension spending and old-age employment. Female employment rates, especially among the low-educated, are more sensitive to changes in pension spending in the ‘Beveridgean’ regime that focuses on basic income security. In the Bismarckian regime characterized by earnings-related pensions, educational differences in the marginal effects on male employment rates are, in particular, larger. Future pension reforms balancing the goal of activation and social equity should therefore consider the longstanding institutional design of public pensions.

THE EFFECT OF INCOME SECURITY IN OLD AGE ON HEALTH OUTCOMES: A COMPARISON BETWEEN CHINA AND THE US

Abstract This paper examines the social determinants of health, particularly the social, political, and economic context of socioeconomic status and health outcomes. Many studies on the political economy of health have highlighted the effects of welfare states on health and health inequalities, typically using welfare state regimes as proxies for social policies. Few research studies have described the association between frailty phenotype and financial wellbeing, however, particularly considering the three-legged stool of retirement income security (public pensions, private pensions, and personal savings/assets) across different welfare state regimes. This study investigates the effects of old-age income disparities on frailty among older adults in the United States and China. Specifically, this paper examines the associations between different sources of old-age income (public and private pensions, personal savings and assets, earnings, workplace subsidies, worker’s compensation, household subsidies, and unemployment insurance benefits) and the five-item frailty phenotype from the RAND Health and Retirement Study (HRS) and the China Health and Retirement Longitudinal Study (CHARLS). The findings reveal that health outcomes measured by the Fried’s frailty phenotype vary considerably by country and income type.

Socioeconomic determinants of cognition among older Brazilian adults: A life‐course approach

AbstractBackgroundThe prevalence of cognitive impairment is higher in low‐ and middle‐income countries compared to high‐income economies. Yet few nationally representative studies from Latin America have investigated life‐course socioeconomic factors related to the susceptibility to age‐associated cognitive impairment. In this study, we examined the associations of early‐ (education and food insecurity), mid‐ (employment stability), and late‐life (any personal income, household per capita income, and self‐perceived income) socioeconomic indicators with the risk of cognitive impairment, while simultaneously exploring whether gender plays an effect‐modifier role on these associations.MethodThe study population comprised Brazilian adults aged 50 years and over (N = 8710) from the Brazilian Longitudinal Study of Aging. Those with ≤ 1.5 SD on a global composite measure of cognition (N = 1005) were assigned to the cognitive impairment group. Unadjusted and mutually adjusted logistic regressions estimated odds ratios with 95% confidence intervals.ResultHigher midlife employment stability and late‐life household per capita income were positively associated with the health of adult cognition. Moreover, secondary analyses performed separately for males and females showed the higher the early‐life educational attainment, the lower the likelihood of impaired cognition among females but not among males. Conversely, having a source of income in old age showed a buffering role against cognitive impairment in males, but this association was not observed in females. No significant associations were noted for early‐life food insecurity or late‐life self‐perceived income.ConclusionThese findings may have implications for population health and health policy by advancing our understanding of socioeconomic determinants of mid‐to‐late‐adulthood cognition.

Elderly vs. Working-Age Generation: Homeownership and Housing Asset Inequality in a Cross-Country Perspective

This study contributes to the discussion about wealth inequality, albeit from a more detailed housing perspective. It explores tenure inequality, as well as housing assets inequality. The latter includes a different approach than the one that prevails in the previous literature on wealth inequalities, which most often considers total net worth or net housing wealth. This study focuses on gross housing asset distribution, irrespective of mortgage debt, which corresponds with the potential of housing equity accumulation as a source of income in old age. It emphasises the intergenerational context, but simultaneously involves cross-country comparisons that allow for relative assessment of the intergenerational differences. Drawing from the Luxembourg Wealth Study (LWS) dataset the paper presents the results for fourteen developed countries. They suggest that the current working-age generation is to a lesser extent involved into homeownership, as compared to the older generation, which results in a smaller housing equity per household, but simultaneously it experiences greater housing inequality. Furthermore, as shown in a cross-country perspective, homeownership rates and housing asset inequality are negatively correlated. Consequently, higher housing asset inequality by lower homeownership rates are the factors that undermine the usefulness of the asset-based welfare concepts in a policy application. Such findings imply that in the macro perspective the potential of housing as a source of additional income in cash and in kind tends to shrink.

주택연금 가입자의 노후 대책 충분성에 대한 연구

This study uses a proportional odds logit model to find out the factors that affect the 'sufficiency of old-age measures prepared so far' for reverse mortgage users among the Housing Finance Corporation's “2021 Housing Pension Demand Survey”. Utilized. Through this, we tried to find an alternative to stabilizing the old-age income of the elderly, targeting the reverse mortgage subscribers. As a result of the analysis, the most influential factor on the sufficiency of reverse mortgage subscribers' retirement plans was the sufficiency of average monthly income, secondly the sufficiency of assets for living in their old age, thirdly satisfaction with reverse mortgage. And next, area of residence followed by average monthly income. The demographic characteristics of the reverse mortgage subscribers had no significant effect at all on the 'sufficiency of old-age measures prepared so far' except for the region. The reverse mortgage subscribers commonly receive monthly payments through a mortgage, so it can be seen that the average monthly income is more important than anything else. It was clearly derived from the analysis results of this study that the monthly income or pension paid each month is the most suitable means of economic stability in old age to prepare for the longevity risk of the reverse mortgage subscribers.

Об’єднання єдиного соціального внеску і податку на доходи фізичних осіб у контексті євроінтеграційних прагнень України

Introduction. The high tax burden on labor is a problem not only for Ukraine, but also for many European countries, negatively affecting the labor market, in particular, it is considered one of the reasons for relatively high unemployment and informal employment. In Ukraine, it is proposed to solve this problem by consolidation the unified social contribution(hereinafter-USC) and personal income tax( hereinafter-PIT)(in fact, by abolishing the unified social contribution). Problem Statement. Despite the fact that the implementation of this proposal is associated with serious fiscal and social risks, it has not been the subject of scientific debate, although it was first published in Ukrainian periodicals in 2018-2020. Purpose. To assess the abolition of the unified social contribution in the context of compliance of such a transformation with European guarantees of adequate social protection and the European social model in general. Methods. The methods used are comparative and statistical analysis, abstract logic, analogies and theoretical generalization. Results. It has been established that, unlike the proposal to consolidate USC and PIT in Ukraine, the implementation of which will lead to a decrease in the living standards of people who have already retired and will receive a minimum income from the state budget, which will be able to protect them only from absolute poverty, and reliance on future pensioners-participants of private pension funds of all risks related to their provision after termination of employment, principle 15 of the European Pillar of Social Rights emphasizes the right of older persons to adequate pensions and a dignified old age. The importance of achieving this goal is evidenced by the fact that every three years, the European Commission publishes a report that reviews the current and future adequacy of old-age incomes in EU member states in three dimensions – poverty prevention, ability to replace income received before retirement and retirement duration – and analyzes key reforms aimed at ensuring the financial sustainability of pension systems. Such reforms are carried out in two main areas: revision of social contribution rates and expansion of financing from general government revenues, in particular, property, consumption, and environmental taxes. Conclusions. It has been found out that the abolition of USC as a stable source of financing the social insurance system in Ukraine will result in either its erosion or complete dismantling of the welfare state. This may complicate our movement towards the EU due to the inconsistency of Ukrainian approaches to solving social problems with European ones.

Household Economics, Information Sources and Annuity Choices: Annuitisation Preferences of Members of the Slovak Private Pension Pillar

This research uses representative survey data to elicit the annuitisation preferences of members of the Slovak-funded private pension pillar. The research explores the impact of socioeconomic and sociodemographic variables, as well as some exogenous factors on annuity choices. The following choices are analysed: (i) taking an annuity upon retirement; (ii) delaying the uptake of an annuity and accumulating savings beyond the official age of retirement; and (iii) leaving accumulated wealth to heirs (bequest motive). The paper provides some original contributions. Firstly, it relates annuity choices to intrafamily risk sharing. Attention is paid to household structure, income levels, and the presence of dependent children. Secondly, the importance of diverse information resources on the formation of annuity preferences is examined. We found that professional advice provided by financial institutions and government bodies was associated with higher probabilities of annuity uptake. A disproportional reliance on informal channels may explain the higher preference towards bequest motives in rural areas. Thirdly, annuity choices are studied in relation to alternative sources of income in old age. A combination of social security pensions and bequest-sharing arrangements may offset the need for the annuitisation of pension wealth.

고령화 구조에서의 노후 소득 · 재산 · 소비에 대한 합리적 과세방안 연구

고령화 구조에서의 노후 소득 · 재산 · 소비에 대한 합리적 과세방안 연구

Size or Content of the Pie? Source of Income and Perceived Income Adequacy of Older Europeans

ABSTRACT While public pensions are usually the main source of income in old age, other sources of income may have various consequences for pensioners’ economic well-being across households and countries. In this study, we analyze how perceived income adequacy of older Europeans is shaped by the source and the income level. We hypothesize that the source of income can be related to a household’s perceived income adequacy beyond the money it provides. We distinguish four categories of income sources: (old age) pensions, other social benefits, work, and capital. We show that the source of income is related to perceived adequacy beyond the money it provides. Compared with pensions, income from other social benefits or work is associated with lower, and income from capital with higher perceptions of adequacy. Perceived adequacy of income from different sources varied further across the household income level. The results convey important messages to the policy makers. Pensions are a powerful policy tool, as they provide positive externalities beyond their monetary value. Attention should also be paid to the low-income households’ possibilities to save.

Understanding the income profile of the elderly in Sri Lanka

While Sri Lanka’s experience of population ageing is closer to that of a developed country, the level of income at which this is happening is much lower. Therefore, ensuring the welfare of the elderly is and will be a challenge in the years to come. A solid understanding of old-age income support systems is, thus, vital for formulating effective policy responses.

Direct and Indirect Income Support and Their Determinants: Developing an Income Profile for Older Adults in Sri Lanka

Given the rapid increase in population aging and older population dependency rates, a sound understanding of old-age income support systems is vital for formulating effective policy responses. This research studies old-age income sources to develop an income profile for older adults in Sri Lanka, measuring direct and indirect income sources using nationally representative survey data from Household Income and Expenditure Surveys 1995/1996 and 2016. In the absence of direct information on intergenerational transfers, we investigate the material support older adults receive from their families, an essential source of income in many developing countries. We found that while indirect income support, cash transfers, and employment are vital sources of old-age income, there have been significant changes in the composition of old-age income over time. Indirect income support is becoming less important, and income from employment and formal cash transfers is becoming more prominent. These results highlight potential avenues to improve the economic well-being of older adults, such as increasing the mandatory retirement age and taking measures to provide decent employment opportunities for older adults while also expanding pension coverage to all types of workers and access to social security for vulnerable groups such as women or the poor.

A Study on the Degree of Sufficiency for Old-age Living according to the Level of Old-age Income of Housing Pension Users

This study provided policy implications by analyzing the effect of the income level of old-age people with reverse mortgages on enough level of living cost for old age. The analysis methods were cluster analysis, analysis of variance, binary logistic analysis, and multiple regression analysis. As a result of the analysis, compared to the reference group A (a group that has consistently well prepared for old age), group B (a group that has not consistently well prepared for old age) was insufficient in both expenditures (family support, cultural life travel expense) and income (national pension, personal and retirement pension, real estate rental income, savings/financial income). Second, group C (a group that was insufficient in the past, but is currently prepared for old age) did not lack in expenditure, but the income was insufficient in national pension, personal/retirement pension, and real estate rental income. Group D (A group that complied with in the past, but is not currently prepared for old age) was insufficient in both expenditure (family support, cultural life travel expense) and income (national pension, personal and retirement pension, real estate rental income). Implications are: First, job expansion for elderly households and minimum livelihood security policies are necessary. Second, it is urgent to receive a pension rather than a lump sum. Third, activation policies of local autonomy for elderly households outside the metropolitan area are required. Fourth, service improvement and tax benefits are required to expand the numbers of participants for reverse mortgages.

Age Demographics and the Tax Mix in US States

Countries with higher old-age dependency rates tend to rely less heavily on income taxes and more heavily on consumption taxes. We investigate this relationship in a panel of US states. To address endogeneity in a sub-national context due to migration, we use lagged in-state births to develop a new instrument for old-age dependency which is shown to be strong and relevant to the results. In an unbalanced panel spanning 1979–2013, we do find a negative relationship between old-age dependency ratio and income tax reliance. But, though persistent across specifications, it is not statistically significant under either ordinary least squares or instrumental variables despite strong instruments and a healthy sample size. We speculate as to what underlying mechanism might deliver a correlation that is robust among the Organisation for Economic Co-operation and Development countries but tepid among US states.

Couples’ Life Courses and Women’s Income in Later Life: A Multichannel Sequence Analysis of Linked Lives in Germany

We examine how the life courses of couples in East and West Germany are linked to women's income in later life using multichannel sequence analysis. By applying a couple perspective, we overcome the individualistic approach in most previous research analysing women's old-age income. Detailed monthly information on spouses' employment and earnings trajectories from age 20 to 50 for the birth cohorts 1925-1965 (N = 2020) stems from SHARE-RV, a data linkage of the administrative records of the German public pension insurance with the Survey of Health, Ageing and Retirement in Europe (SHARE). We identify seven clusters of couples' life courses and link them to women's absolute individual and relative household income in later life using a cohort comparison to identify trends over time. While in older cohorts, women in male-breadwinner type clusters achieve the lowest, and those in dual-earner type couples have the highest incomes, this relationship does no longer prevail in younger cohorts. Here, we identify a polarization in dual-earner and male-breadwinner type clusters. The former increasingly diverge into successful female-breadwinner constellations and those with both partners in marginalized careers. The latter polarize between persistent male-breadwinner constellations and those in which women increase their labor market engagement.

Subjectively perceived change in consumption along the living standards in old ages

THE AIMS OF THE PAPER
 The aim of our research is to provide a picture of the conditions for providing the income background necessary for old age, the spending habits of the 50 plus age group, and to illustrate how the old ages goup of our survey, the elderly age group we survey perceives changes in their spending in the last 10-year.
 METHODOLOGY
 We used a representative personal survey with 500 Hungarian people. This survey was made in February 2020 on a targeted sample of the Hungarian population aged 50-70. In the analysis method, we used cluster formation, because we tried to identify groups showing different consumption changes based on the consumption categories of the Hungarian Central Statistical Office.
 MOST IMPORTANT RESULTS, NEW FINDINGS
 The results show that the people who participated in the survey had little perception of a change in their spending compared to their life 10 years before. On the other hand, our retirement income in old age may lag far behind the income in active, working years, so we can assume that if the significant decline in income did not affect consumption patterns, old-age income may be supplemented by savings in old age.
 EMPIRICAL IMPLICATIONS OF THE RESEARCH
 The clusters that we made shows well that the spendings of the 50-plus age group are also significant for the economy as a whole. The types of their expenditures is diverse and there is a lot of items that they would not necessarily be able to afford from an average income funded by the pension scheme. The characteristics of the clusters also show that there is a positive relationship between financial awareness (planning spending, exploring sales) and age. In our oppinion this is the reason why financial awareness education, the communications about this is very important. The financial management of households can be incorporated into the education of children from an early age.
 Acknowledgments: This research was partially supported by the Human Resource Development Operational Programme, grant No.: EFOP-3.6.1-16-2016-00004 “Comprehensive developments at the University of Pécs for the implementation of intelligent specialization”

POSTPONING RETIREMENT AND SOCIAL SECURITY IN A TWO-SECTOR MODEL

Pay-as-you-go social security schemes in the Organisation for Economic Co-operation and Development countries are facing solvency problems, as people are living longer and birth rates have declined. Postponing the full retirement age (FRA), when retirees are entitled to full pension, has been proposed as a solution. This effectively lowers the payroll tax rate since pension is paid only in the post-FRA period. In a two-period two-sector overlapping generations model, I show that this shift lowers savings (because a part of the expected old-age income is consumed in the first period), as employment increases. In the transition to the new steady state, capital is decumulated and the wage rate falls. Contrast this with a reduction of the payroll tax rate where the initial old suffer reduced consumption, but the young have higher post-tax income and this spurs capital accumulation.

Pension reform and the efficiency-equity trade-off: Impacts of removing an early retirement subsidy

We provide empirical evidence that the removal of work disincentives embedded in retirement earnings tests can increase old-age labor supply considerably, but it does so at the cost of more income inequality. To identify causal effects, we exploit a reform of the Norwegian early retirement program, which entailed that adjacent birth cohorts faced completely different work incentives from the age of 62. The reform removed a strict retirement earnings test such that pension wealth was redistributed from early to late retirees. Given pre-existing employment and earnings patterns, this implied a considerable rise in old-age income inequality. In theory, this direct increase in inequality could be either amplified or offset by changes in labor supply. We estimate that the reform triggered a 42% increase in average hours worked during the period covered by early retirement options; however, as labor supply responses were of similar magnitudes across the earnings distribution, they did little to modify the rise in inequality. As measured by the Gini coefficient, inequality in overall old-age income rose by approximately 0.03 (21%).

Rising housing costs and income poverty among the elderly in Germany

Housing costs have been increasing rapidly in Germany in recent years. Given the importance of housing for the elderly, one may expect many to be forced to dedicate ever-larger shares of their income to housing costs. Using longitudinal data from the German Socio-Economic Panel (GSOEP), we examine how changes in housing costs between 1996 and 2017 have affected income poverty among Germany’s over-65s. Our results reveal that higher costs have indeed contributed to increased income poverty in old age in that period. Our pooled probit regression models as applied to Germany’s elderly show that increased housing costs mean tenants, homeowners with outstanding mortgages, single-person households and people with migration background all suffer a higher risk of poverty, while the risk remains lower for outright homeowners. Since the relative income position of the elderly is expected to further deteriorate in future, our study suggests a need for policy action to avoid a worsening in figures for old-age income poverty in Germany.

Practical Applications of The Top Three Pension Systems: Denmark, Finland, and the Netherlands

In <b>The Top Three Pension Systems: <i>Denmark, Finland, and the Netherlands</i></b>from the Fall 2020 issue of <b><i>The</i></b><b><i>Journal of Retirement</i></b>, authors <b>Svend E. Hougaard Jensen</b>(of <b>Copenhagen Business School</b>), <b>Jukka Lassila, Niku Määttänen, Tarmo Valkonen</b>(all of the <b>Research Institute of the Finnish Economy</b>), and <b>Ed Westerhout</b>(of <b>Tilburg University</b>) analyze the three top-rated pension systems from the 2018 Mercer Global Pension Index. All three systems share common strengths: mandatory participation, a minimum guaranteed old-age income, a high income-replacement rate, and robust fiscal sustainability. They also have privatized elements (like decentralized management and market-based investing) and rely on social partners (employee and employer representatives) to help get public buy-in for policies. However, all three pension systems face similar challenges–like legitimacy issues (since social partners are elected by a shrinking number of union members) and the fact that mandatory pension contributions can preempt savings for shorter-term goals. Policymakers worldw study these pension systems to help find solutions to problems in their own systems. Policymakers in the United States can find valuable information on issues like privatizing Social Security, eligibility changes, and getting public buy-in for reforms designed to increase the system’s sustainability. <b>TOPICS:</b>Retirement, social security, pension funds, wealth management